Legislature(2013 - 2014)SENATE FINANCE 532

04/04/2013 09:00 AM Senate FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 18 BUDGET: CAPITAL TELECONFERENCED
Moved CSSB 18(FIN) Out of Committee
+= HB 77 LAND USE/DISP/EXCHANGES; WATER RIGHTS TELECONFERENCED
Heard & Held
*+ SB 74 UNIVERSITY OF ALASKA BUILDING FUND TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
CS FOR HOUSE BILL NO. 77(RES)                                                                                                 
                                                                                                                                
     "An  Act relating  to the  Alaska  Land Act,  including                                                                    
     certain authorizations, contracts,  leases, permits, or                                                                    
     other disposals of state  land, resources, property, or                                                                    
     interests;  relating to  authorization for  the use  of                                                                    
     state land  by general permit; relating  to exchange of                                                                    
     state   land;  relating   to  procedures   for  certain                                                                    
     administrative     appeals     and     requests     for                                                                    
     reconsideration   to   the  commissioner   of   natural                                                                    
     resources; relating  to the Alaska  Water Use  Act; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:17:28 AM                                                                                                                    
                                                                                                                                
DANIEL   SULLIVAN,  COMMISSIONER,   DEPARTMENT  OF   NATURAL                                                                    
RESOURCES  (DNR), highlighted  the administration's  efforts                                                                    
on permitting  reform. He  commented that  permitting reform                                                                    
and  modernization  efforts  entailed  establishing  systems                                                                    
that were more "efficient,  timely, and certain." The reform                                                                    
effort  was  in  its  third  year  and  progress  was  made.                                                                    
Permitting  reform   enjoyed  bi-partisan  support   in  the                                                                    
legislature  and  benefitted  every Alaskan.  He  emphasized                                                                    
that HB 77 and the  permitting reform efforts were not about                                                                    
permitting  the  Pebble  Mine.   The  department  was  fully                                                                    
committed to protecting fish  habitat. The legislation would                                                                    
not weaken fish habitat protection.  He noted the backlog in                                                                    
the   department's   reservations   and  stated   that   DNR                                                                    
adjudicated  thirty three  reservations  in  the last  three                                                                    
years. Most  of the adjudications  were between DNR  and the                                                                    
Department  of   Fish  and  Game   (DFG)  and   resulted  in                                                                    
protecting   fish   habitat.   The   reduced   backlog   and                                                                    
adjudications  demonstrated the  department's commitment  to                                                                    
protecting fish habitat.                                                                                                        
                                                                                                                                
CORA  CAMPBELL, COMMISSIONER,  DEPARTMENT OF  FISH AND  GAME                                                                    
(DFG),  communicated  that  she  heard  a  lot  of  "serious                                                                    
concern" during  public testimony on  HB 77[See BASIS  HB 77                                                                    
minutes   04/03/2013  1:42   PM].  She   stated  that   most                                                                    
testifiers believed that  the legislation reduced protection                                                                    
for fish  habitat. She maintained  that the  legislation did                                                                    
not  affect DFG's  Title 16  authority to  protect fish  and                                                                    
fish habitat. The bill did  not alter statutes that required                                                                    
DNR  to  consult  with DFG  when  considering  fish  habitat                                                                    
impacts for a water use  authorization. She shared that many                                                                    
testifiers  recognized Alaska's  world  class fisheries  and                                                                    
sustainable management.  She stressed  that with  passage of                                                                    
the bill,  all of the state's  fisheries protection remained                                                                    
intact.  She  mentioned  the concerns  from  "partners"  and                                                                    
individuals who  had gathered data  for a  water reservation                                                                    
application and  believed that the data  became unacceptable                                                                    
if  HB 77  was adopted.  She countered  that the  data would                                                                    
remain usable to move an  application forward. She continued                                                                    
that  some testifiers  believed the  legislation created  an                                                                    
obstacle for  those pursuing a  water reservation  to access                                                                    
both DNR and  DFG. She explained that  both departments must                                                                    
review   and  approve   the  applications.   She  encouraged                                                                    
applicants  to create  a  partnership  with the  departments                                                                    
from the start of the  process. She indicated that the water                                                                    
reservation process  would work  more efficiently  under the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Commissioner Campbell addressed the  concerns related to the                                                                    
DFG  zero  fiscal  note.   The  department  determined  that                                                                    
existing  staff could  handle any  additional workload  from                                                                    
the legislation.  She reported  that staff was  currently in                                                                    
place  in the  departments  "water shop."  Staff was  tasked                                                                    
with reviewing DNR's water  reservations and partnering with                                                                    
the public.                                                                                                                     
                                                                                                                                
Commissioner  Campbell continued  that some  testifiers felt                                                                    
that  obtaining a  water  reservation was  the  only way  to                                                                    
ensure an  adequate water  supply in  order to  protect fish                                                                    
habitat. She  stressed that  DFG had  the ability  to review                                                                    
any  DNR  water  authorizations.  In  addition,  DFG  had  a                                                                    
separate fish habitat permitting  process that mandated fish                                                                    
habitat protection  when necessary. A water  reservation was                                                                    
not the only avenue to protect fish stream habitat.                                                                             
                                                                                                                                
9:25:42 AM                                                                                                                    
                                                                                                                                
Commissioner  Sullivan  asserted   that  counter  to  public                                                                    
perception;  the  legislation   would  not  diminish  public                                                                    
participation. The department  encouraged more participation                                                                    
early  on in  the application  process in  order to  address                                                                    
concerns. He informed  the committee that a  provision in HB
77  authorized  DNR  to   issue  preliminary  best  interest                                                                    
findings. The  provision provided for two  opportunities for                                                                    
public comment  and statutorily  ensured more  public notice                                                                    
in  the  process. He  mentioned  that  DNR made  efforts  to                                                                    
increase  public  notice  especially   in  rural  areas.  He                                                                    
exemplified a recent  DNR draft Yukon area  plan. The Tanana                                                                    
Chiefs requested  an extension for the  public notice period                                                                    
and  asked   for  a  briefing   from  the   department.  The                                                                    
department agreed.  The public  notice period  remained open                                                                    
and DNR provided the briefing.  He noted a similar situation                                                                    
in  Bristol  Bay  with  the   Bristol  Bay  area  plan.  The                                                                    
department  was eager  to  extend the  30  day deadline  for                                                                    
public comment to ensure full public participation.                                                                             
                                                                                                                                
Senator  Hoffman   observed  that   the  vast   majority  of                                                                    
dissenting public  testimony centered  on Section 40  of the                                                                    
legislation, which  abrogated the ability for  a "person" to                                                                    
reserve  water rights.  He  asserted  that individual  water                                                                    
rights  were at  the heart  of the  issue. He  stressed that                                                                    
Section 40  commanded focused scrutiny by  the committee. He                                                                    
referred  to a  letter  from the  NANA Regional  Corporation                                                                    
(copy on file)  to the governor dated March 30.  He read the                                                                    
following:                                                                                                                      
                                                                                                                                
      "Section 40 would eliminate the ability  of "a person"                                                                    
     to  reserve water  rights. Under  the existing  statute                                                                    
     (AS 46.15.145(A)), Alaska  Native Corporations ("ANCs")                                                                    
     created   pursuant   to   the  Alaska   Native   Claims                                                                    
     Settlement  Act,   as  well   as  other   entities  and                                                                    
     individuals, are  eligible to apply for  reserved water                                                                    
     rights as 'a person'."                                                                                                     
                                                                                                                                
Senator Hoffman  stated that  the courts  would be  the only                                                                    
avenue  for an  individual to  pursue water  rights, if  the                                                                    
right  was removed  from statute.  He pronounced  that, "the                                                                    
people of  Alaska deserve better."  He felt  that individual                                                                    
water  rights  were  inviolable   and  its  elimination  was                                                                    
contrary  to constitutional  rights. He  was bewildered  why                                                                    
the  administration was  attempting to  eliminate individual                                                                    
water rights. He felt that it  was his job to protect such a                                                                    
fundamental  right  for  the   citizens  of  the  state.  He                                                                    
estimated  that  90  percent  of  the  testimony  on  HB  77                                                                    
strongly protested  the removal of individual  water rights.                                                                    
He  reiterated  that water  rights  were  guaranteed by  the                                                                    
state  constitution.  He  called   for  the  elimination  of                                                                    
Section 40 of the bill.                                                                                                         
                                                                                                                                
9:34:10 AM                                                                                                                    
Commissioner Sullivan  acknowledged the  discussion centered                                                                    
on  "water  authorizations"   during  public  testimony.  He                                                                    
identified three  types of  authorizations that  were issued                                                                    
by the state:  (1) Temporary water use  permits (TWUPS), (2)                                                                    
Water  rights,  (3)Water  reservations. He  delineated  that                                                                    
TWUPS and water rights involved  the removal of water from a                                                                    
water body.  Anyone can  apply for either  one and  were the                                                                    
most requested  permits. The department issued  thousands of                                                                    
TWUPS each year  and strove to do so in  a timely manner. He                                                                    
continued  that  water  rights  required  a  more  intensive                                                                    
application process.  Once granted the right  was permanent.                                                                    
He communicated  that HB 77  did not affect TWUPS  and water                                                                    
rights  permitting. He  stressed that  anyone could  come to                                                                    
DNR  for  a  temporary  water  permit  or  water  right.  He                                                                    
explained that an application for  a water reservation was a                                                                    
much  more  involved process  that  included  three to  five                                                                    
years of  data collection. He  noted that DNR  received much                                                                    
fewer   applications  for   water  reservations.   The  most                                                                    
frequent  applications  came  from   DFG  for  fish  habitat                                                                    
protection.  He explained  that the  bill changed  the water                                                                    
reservations  application  process  and  proposed  that  the                                                                    
application  for  water  reservations  "come  formerly  from                                                                    
public  agencies   to  manage   the  public   resource."  He                                                                    
emphasized that  "individuals, companies, NGO's,  and tribes                                                                    
could  initiate   the  application  process  …   through  an                                                                    
agency."                                                                                                                        
                                                                                                                                
Commissioner   Sullivan  addressed   a  question   from  the                                                                    
previous day regarding the necessity  to change the statute.                                                                    
He  explained that  Alaska had  an abundance  of water.  The                                                                    
department  was  concerned  with  a recent  legal  trend  of                                                                    
rulings from  court cases that  prohibited DNR  from issuing                                                                    
any  TWUPS  or  water  rights  from the  body  of  water  in                                                                    
question until  the water  reservation was  adjudicated. The                                                                    
process could take many years.  The department believed that                                                                    
the situation  would interfere with  the timely  issuance of                                                                    
TWUPS and water rights  applications. He reiterated that the                                                                    
legislation  would not  affect  the vast  majority of  water                                                                    
right applications.                                                                                                             
                                                                                                                                
Senator  Hoffman understood  the issue.  He knew  that water                                                                    
right reservations  were few in  number. He opined  that the                                                                    
problem was that citizens had  to apply through an agency to                                                                    
obtain  a water  reservation. He  emphasized that  it was  a                                                                    
constitutional right  for citizens to directly  apply to the                                                                    
government for  a water right.  He believed the  citizens of                                                                    
Alaska  were  being treated  as  "second  class citizens  in                                                                    
their  own state."  Considering  the small  number of  water                                                                    
reservation  applications why  bother changing  the statute.                                                                    
Requiring  that an  individual apply  through an  agency for                                                                    
water  reservations   made  the  application   process  more                                                                    
onerous  as opposed  to streamlined,  which  was counter  to                                                                    
what   the   administration   was   striving   to   achieve.                                                                    
Commissioner  Sullivan  stated  that  a  court  order  could                                                                    
prohibit  issuance of  TWUPS or  water reservations  until a                                                                    
water  reservation was  resolved. He  judged that  situation                                                                    
was  not   an  example  of  streamlining.   Senator  Hoffman                                                                    
suggested that  another solution  was possible that  did not                                                                    
infringe   on  individual   rights.  Commissioner   Sullivan                                                                    
responded  that  the  court   issue  "slapped  the  door  on                                                                    
individual's rights to access water."                                                                                           
                                                                                                                                
9:42:23 AM                                                                                                                    
                                                                                                                                
Senator  Olson stated  that he  wrote a  letter to  Co-Chair                                                                    
Meyer that  requested the bill  be placed in  a subcommittee                                                                    
to address the constitutional issues the bill raises.                                                                           
                                                                                                                                
Co-Chair  Meyer stated  that he  was  taking the  suggestion                                                                    
under advisement.                                                                                                               
                                                                                                                                
Senator Dunleavy  wondered whether taking  water reservation                                                                    
applications to court was employed  as a strategy to prevent                                                                    
projects from moving  forward. Commissioner Sullivan replied                                                                    
that he did not want  to hypothesize about the intentions of                                                                    
applicants.  He restated  that the  departments concern  was                                                                    
over the possibility that the  legal trend had the potential                                                                    
to delay  TWUP and water reservation  applications. He added                                                                    
that water  reservations were  reissued in  perpetuity after                                                                    
an  initial  ten  year  review  period.  Water  reservations                                                                    
demanded responsible management. He  thought that having the                                                                    
water reservation managed by a state agency was preferable.                                                                     
                                                                                                                                
Co-Chair Kelly asked how long it  took the agency to issue a                                                                    
water  reservation. Commissioner  Sullivan answered  that it                                                                    
took three to five years of data collection.                                                                                    
                                                                                                                                
Co-Chair Kelly  wondered whether a water  body with multiple                                                                    
reservations could be made concurrently.                                                                                        
                                                                                                                                
WYNN  MENEFEE, DEPUTY  DIRECTOR, DIVISION  OF MINING,  LAND,                                                                    
AND WATER,  DEPARTMENT OF NATURAL RESOURCES,  responded that                                                                    
an   entire  water   body  was   not  considered.   A  water                                                                    
reservation adjudication must specify  a specific segment of                                                                    
a water body.                                                                                                                   
                                                                                                                                
Co-Chair Kelly  wondered whether DNR could  process multiple                                                                    
water  reservations for  the same  water  body. Mr.  Menefee                                                                    
explained that  only if  the reservations  were on  the same                                                                    
segment of the water body.                                                                                                      
                                                                                                                                
Co-Chair Kelly surmised that  environmental groups could use                                                                    
water reservations as a strategy  to shut down projects. Mr.                                                                    
Menefee replied that the strategy  might exist but could not                                                                    
predict how successful the outcome would be.                                                                                    
                                                                                                                                
Commissioner Sullivan restated  the departments concern that                                                                    
taking water reservation adjudication  to court delayed TWUP                                                                    
and water right applications.                                                                                                   
                                                                                                                                
Co-Chair Kelly  felt that  "a flaw"  existed in  current law                                                                    
that allowed "outside  groups to control the  length of time                                                                    
it  took to  develop projects"  through manipulation  of the                                                                    
process. He did not believe it was a constitutional issue.                                                                      
                                                                                                                                
9:50:32 AM                                                                                                                    
                                                                                                                                
Senator Olson asked  whether the state could  seek a summary                                                                    
judgment   against  such   tactics.  Commissioner   Sullivan                                                                    
related that  the department did  not have to grant  a water                                                                    
reservation application  but the  department had  to process                                                                    
every water reservation application.  He restated that court                                                                    
procedures  might prohibit  other water  permits from  being                                                                    
issued  until  the  water reservation  was  adjudicated.  He                                                                    
believed it was a "troubling trend."                                                                                            
                                                                                                                                
Co-Chair Kelly  believed that outside groups  were "shutting                                                                    
the state  down." Taking water reservation  adjudications to                                                                    
court was  the groups  "clever" tactics to  stop development                                                                    
in  the state.  He thought  that the  constitution gave  the                                                                    
legislature  the authority  to determine  how to  administer                                                                    
water  rights.  He  believed that  state  administration  of                                                                    
water  rights  was not  a  constitutional  issue. He  viewed                                                                    
Section 40 as  a response to stop  the outside environmental                                                                    
groups from shutting down development in the state.                                                                             
                                                                                                                                
Vice-Chair  Fairclough asked  whether individuals  were able                                                                    
to  directly  petition  for   water  reservations  in  other                                                                    
states. Commissioner Sullivan answered in the negative.                                                                         
                                                                                                                                
Vice-Chair  Fairclough  felt  that  Alaskans  valued  direct                                                                    
local control.  She initiated  a series  of questions  in an                                                                    
effort  to  understand  the permitting  process.  She  asked                                                                    
whether the  water reservation statute was  adopted in 1986.                                                                    
Mr. Menefee answered in the affirmative.                                                                                        
                                                                                                                                
Vice-Chair  Fairclough wondered  whether  an individual  had                                                                    
ever qualified  for a  water reservation  in the  state. Mr.                                                                    
Menefee answered  that the state never  fully adjudicated an                                                                    
application from an individual.                                                                                                 
                                                                                                                                
Vice-Chair  Fairclough recapped  that  an individual  person                                                                    
never fully qualified for a water reservation in the state.                                                                     
She  asked  how  the  data collection  process  worked.  Mr.                                                                    
Menefee elaborated  that the data collection  process varied                                                                    
depending on the type of  resource you wanted to protect. In                                                                    
the case  of fish habitat a  person would have to  study the                                                                    
volumes of  water in a water  body segment over a  period of                                                                    
time.  Statistically 5  years was  necessary to  balance out                                                                    
weather  trends. The  evaluation also  included the  species                                                                    
living in the habitat.                                                                                                          
                                                                                                                                
Vice-Chair Fairclough asked how  an individual Alaskan would                                                                    
find out  what criteria had to  be met and the  data to meet                                                                    
the applications  requirements. Mr. Menefee stated  that the                                                                    
person would  work with  the agencies. In  the case  of fish                                                                    
habitat, DNR would direct the individual to DFG.                                                                                
                                                                                                                                
Vice-Chair  Fairclough  asked  who  in DFG  would  help  the                                                                    
individual  obtain the  data. Commissioner  Campbell replied                                                                    
that the  department had  a "water  shop" with  staff tasked                                                                    
with assisting the applicant to  "navigate the process." She                                                                    
noted that  the department  delineated all data  required to                                                                    
complete the application.                                                                                                       
                                                                                                                                
Vice-Chair Fairclough  wondered how  long the  process took.                                                                    
Commissioner   Campbell   explained  that   two   approaches                                                                    
existed.   An   individual   could  proceed   unaided.   The                                                                    
preferable approach  was when the  person gathered  the data                                                                    
and DFG reviewed  the data and assisted the  person with the                                                                    
application. She  reiterated that the  timeliest requirement                                                                    
was gauging  water volume and  not due  to a backlog  in the                                                                    
department.                                                                                                                     
                                                                                                                                
Vice-Chair Fairclough  wondered whether there was  a general                                                                    
checklist   or   whether   each   applicant's   requirements                                                                    
differed. Commissioner  Campbell did not know  and agreed to                                                                    
provide the information.                                                                                                        
                                                                                                                                
Vice-Chair  Fairclough queried  how the  agencies can  trust                                                                    
whether  the  data   collected  was  accurate.  Commissioner                                                                    
Campbell  informed  the   Senator  that  standard  equipment                                                                    
existed for stream gauging to determine water flows.                                                                            
                                                                                                                                
Mr. Menefee  continued that DNR worked  through USGS {United                                                                    
States Geological  Survey] on stream gauging.  He noted that                                                                    
USGS  was   the  stream  gauge  experts   and  provided  the                                                                    
standards for  accurate results.  He added that  the statute                                                                    
defined   the   requirements   for  the   application.   The                                                                    
applicants worked with DNR to  determine the best techniques                                                                    
to meet the requirements and correctly collect the data.                                                                        
                                                                                                                                
Vice-Chair Fairclough deduced that  a person could work with                                                                    
the  departments to  complete the  application. She  queried                                                                    
the  cost of  the equipment  necessary and  wondered whether                                                                    
and individual  could successfully complete  the application                                                                    
on their  own. Mr.  Menefee explained that  most individuals                                                                    
contracted  with a  company  that  performed water  gauging.                                                                    
Every  individual  worked  through  government  agencies  to                                                                    
develop an application plan and begin the process.                                                                              
                                                                                                                                
Vice-Chair  Fairclough wanted  to demonstrate  that a  state                                                                    
agency did not  detract an individual from  the process. She                                                                    
concluded   that  the   government  agencies   were  readily                                                                    
available to assist applicants.                                                                                                 
                                                                                                                                
10:08:22 AM                                                                                                                   
                                                                                                                                
Commissioner  Sullivan  concluded that  the  administrations                                                                    
highest priority  was to work  with the native  community on                                                                    
water issues and intended to do so.                                                                                             
                                                                                                                                
CS HB 77  (RES) was HEARD and HELD in  committee for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
10:09:58 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:17:42 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
10:18:48 AM                                                                                                                   
AT EASE                                                                                                                         
10:20:15 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                

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SB 18 Work Draft Version P 040413.pdf SFIN 4/4/2013 9:00:00 AM
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Sassan Mossanen support letter.pdf SFIN 4/4/2013 9:00:00 AM
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Testimony SB 18 ALPAR Sen Fin.pdf SFIN 4/4/2013 9:00:00 AM
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SB074-UA-SYSBRA-4-01-13.pdf SFIN 4/4/2013 9:00:00 AM
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